Only a few companies can develop customer loyalty and trust beyond a single purchase transaction, and only just a few can state that their employees feel truly engaged and motivated at their jobs. These companies are resilient and prosperous because they were able to generate a bond with their customers, employees, and other stakeholders who usually would go above and beyond to support their company of choice, especially in crises such as the pandemic. Their secret: a clearly articulated and authentic purpose that is a core part of who they are as businesses. Their business purpose is the main driver for their success.
What is purpose in business?
Traditionally, companies and business leaders talk about building purpose to generate employment motivation or help with a particular environmental cause or strategy. Still, they don't consider having a business purpose as a core part of who they were as organizations. , Developing a business purpose many times is treated as a marketing campaign instead of something that organically should flow within an organization.
When advising our clients in implementing a long-term sustainability strategy, we often realize that they don't know what having a business purpose means. This lack of understanding is one of the biggest obstacles when trying to connect their sustainability strategy to their businesses’ core strategy. One definition that we like is that a business purpose is an aspirational reason for being beyond profits. Ernst and Young propose a more extended one that includes, “...It is the organization’s single underlying objective that unifies all stakeholders. ..”.
At TBB, we like to say that the purpose of your organization is your business's raison d’etre. It is Why your organization matters to people.
A clear purpose fuels innovation and creativity, and it provides a lens for decision-making because you immediately discard whatever is not aligned with your purpose and you focus on what is vital to your business. We constantly remind our clients that your business purpose should be your North Star, showing you how. Other businesses can replicate your products or offer a similar one, but your purpose is only yours. It is unique to your company and is your most powerful differentiator.
A business purpose also refers to finding a way to express your business’s impact on your stakeholders’ lives. A great example is the famous outdoor apparel company Patagonia. They say, “ We are in business to save our home planet.” Having always been environmentally conscious, the company keeps leaning further into environmental activism, and all the decisions they make are aligned with their purpose. They have ads that ask their customers to consume less and re-use what they have. They even provide options for second-hand purchases for most of their products, and they contribute 1% of their sales for environmental causes that they care about. They are a clear example of an authentic purpose that is part of a long-term business strategy.
How to develop your business purpose?
Leaders and companies that have effectively defined their corporate purpose have taken one of these two approaches:
Revisiting their past
Looking into the future
The first approach implies digging into the past and looking for your company’s reason for being. It requires going back to when the business was founded to find the heart of your company. You will have to answer questions such as: What were the original principles on which your company was founded? What were the guiding principles and values? What needs was the company trying to cover?
The second approach requires a look into the future, re-shaping your company’s reason for being or rediscovering it. It encompasses being in-sync with the ever-changing business world. Which trends are currently affecting your business, and which megatrends will affect it in the future? What are your stakeholders’ current needs and concerns? What needs is your company cover? What opportunities, needs, challenges lie ahead? Where can you have the most meaningful impact? Which big problems or concerns in the world is your company capable of and passionate about solving?
These approaches helped many companies define and articulate their purpose, but often times many face the challenge of making it authentic.
The authenticity of your business purpose
Making your purpose alive within your organization is critical to make it authentic, believable, and long-lasting. Nowadays, there is a general mistrust of governments, the media, and business in general. So being truthful to your purpose is key to maintaining your stakeholders’ trust and loyalty. Your newly defined purpose must be connected to your strategy and actions. It must be communicated and implemented by the organization’s top management and replicated, breathed, and acted upon by everyone in the company.
One of the main reasons employees lacks a sense of purpose is that top executives don't walk the talk. Consequently, their business purpose becomes just a tagline that is viewed as lack of integrity both internally and externally.
Lastly, companies should consider that developing a business purpose is not a destination but a journey that companies need to live upon. The world is continuously changing, and the needs and concerns of your stakeholders too. Remember to assess if your purpose is authentically lived within your organization and be ready to adapt to new circumstances as these new needs and concerns change.
We believe every business should understand and find its purpose. Just as each individual is unique and valuable, each business has its unique strengths that have the potential to change the world for the better. Defining your company purpose can give you clarity and a direction that unifies and energizes your organization.
Thinking Beyond Business